How public schools are funded: federal, state and local money

U.S. public school districts took in $991 billion in fiscal year 2022-23: 44.2% from their states, 43.3% from local sources, mostly property taxes, and 12.5% from the federal government, including Title I. Because local money follows local property wealth, spending per student differs by thousands of dollars between districts.

Written from NCES F-33 fiscal year 2022-23 · published · reviewed · editorial process

Three sources of money

U.S. public school district revenue by source, fiscal year 2022-23State $438bn; Local $429bn; Federal $124bn; total $991bn.
  • State$438bn 44%
  • Local$429bn 43%
  • Federal$124bn 12%

Source: NCES F-33 School District Finance Survey, fiscal year 2022-23: revenue by source, summed over every reporting district.

The mix differs by state. The federal share was highest in Mississippi (23.4%) and lowest in Vermont (6.2%); the local share ranged from 64.4% in New Hampshire to 1.3% in Hawaii.

Federal programs

Federal money reaches schools mainly through the Elementary and Secondary Education Act, reauthorized as the Every Student Succeeds Act in 2015, and the Individuals with Disabilities Education Act.

Title I, Part A is the largest program. It is allocated to states by formula on poverty counts and passed through districts to schools with many students from low-income families. It pays for extra staff, tutoring, extended learning time, training and family engagement, and must add to state and local money rather than replace it.

IDEA helps fund special education. Schools must serve every eligible student with a disability whatever it costs; federal IDEA grants cover only part of the cost.

Smaller programs include Title II (teachers), Title III (English learners), Title IV (student support and enrichment) and 21st Century Community Learning Centers (after-school programs). School meals are a separate Department of Agriculture program.

State formulas: the biggest piece

States provided 44.2% of district revenue. Most set a foundation amount per student and fill the gap between what a district raises locally and that amount, so districts with more local wealth receive less state aid. Most formulas add weights for students who cost more to educate: students from low-income families, students with disabilities, English learners and career and technical students. Categorical grants pay for transportation, early childhood and other set purposes.

Local money and the spending gap

Local revenue, 43.3% of the total, is mostly property tax: the same tax rate raises more per student where property is worth more. States offset part of the difference, not all of it.

District at the 10th percentile$10,975current spending per student
Median district$14,745U.S. figure $16,236
District at the 90th percentile$24,2992.2 times the 10th

Source: NCES F-33 fiscal year 2022-23: current spending per student, districts with 1,000 or more students (7,408). Part of the gap is cost, not wealth: rural districts and districts with more students in special programs spend more per student.

How a district splits its budget matters too: 59.1% of current spending went to instruction nationally; the rest paid for support services such as counseling, transportation, administration and operations.

What Title I means for a school

A school marked Title I on its PlainSchools record received this federal money in 2021-22, the last year NCES published the status. It usually shows up as extra reading and math specialists, tutoring, summer or after-school programs and family engagement work. It says the school serves many students from low-income families; it does not say how well the school teaches.

Questions

  1. What percentage of school funding comes from the federal government?
    12.5% of U.S. school district revenue was federal in fiscal year 2022-23; 44.2% came from states and 43.3% from local sources, mostly property taxes (NCES F-33). The federal share still included pandemic relief (ESSER) money that year.
  2. What is Title I funding and who gets it?
    Title I, Part A is the largest federal K-12 program. It sends money through states and districts to schools with many students from low-income families; schools where at least 40% of students are low-income can run a schoolwide program. Title I money must add to state and local funding, not replace it.
  3. Why do some districts spend more per student than others?
    Local revenue depends on local property wealth and tax rates, and states offset it only in part. Among districts with 1,000 or more students, one at the 90th percentile spent $24,299 per student in fiscal year 2022-23 and one at the 10th $10,975.
  4. What does IDEA funding pay for?
    The Individuals with Disabilities Education Act sends federal grants to states for special education and related services. Schools must provide a free appropriate public education to every eligible student whatever it costs; federal IDEA money covers only part of that cost, and states and districts pay the rest.

Related

Sources

Source: NCES F-33 School District Finance Survey District revenue and expenditures · FY 2022-23

Compiled from official source data by .